Mustard Seeds Investment Club

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Turbosonic technologies (OTC BB: TSTA) markets and developes air pollution control devices for a variety of industries. For more information visit:
http://www.turbosonic.com

TSTA has no liquidity issues, almost no long term debt, a positive cash flow, fantastic revenue growth, positive earnings, no history of dilution.

--Last trade as of 8/20 @ 4 pm, $.75. PE ratio: 22
--Positive earnings and fantastic growth rate, last quarter EPS of .034. EPS for next quarter should be in the .04-.05 range based on backlog and unearned revenues alone (4.8 million and 1.6 million, for a total of 6.4 million, assuming a similar return on sales). Revenue growth of over 100% to 5.3 million dollars in the last fiscal quarter.
--Current ratio: 1.4 Cash: 3.1 million cash per share: .31
--Current assets: 4.5 million Current liabilities: 3.5 million Long term liabilities: .1 million.
--Outstanding shares - 10 million, float - approx. 4 million. No shares have been diluted since 1998.
--Recently sold 500,00 shares for 500,000 cash (1$ per share, 30% over market price) in conjunction witha strategic marketing and management agreement with Hamon-Research Cottrell, a company with annualized revenues of 580 million dollars. This includes an option for Hamon to purchase a majority holding in this company from 3 TSTA directors between $1.80 and $2.40 per share
--Customers include: General Motors, Dow Chemical, Royal Shell Corporation, Molson Breweries, Union Carbide.

Operations:
Revenues for the three month ending March 31st were 5,372,096, brining revenues for the fiscal year to 8,707,978. This represents an increase of 180% for the period compared to 2000, and 91% for the nine months compared to 2000. Net income was 338,128 for the quarter ending March 31st, and 349,355 for the fiscal year thus far. This represents an increase of 358% and 349% for the respective periods in fiscal 2000. Earnings per share for the quarter were .033, and for the 9 months were .034. The price earning ratio for the trailing twelve months is 22.
The company has 4.5 million in current assets and total assets of 5.5 million. Current liabilities are 3.6 million, and total liabilities are 3.7 million. 3.1 million of the current assets are in the form of cash. 1.6 million of the current liabilities are unearned revenues, expected to be completed during the quarter ending June 30th. The company also has an estimated backlog of 4.8 million, of which 4.15 million was expected to be completed by June 30th. The current ratio is 1.3 and working capital is .9 million.

The company provided exceptional growth thus far in the fiscal year, and such growth is expected. Revenues for the 4th quarter will be almost 7 million based on the estimated backlog and unearned revenues alone. This will represent a 30% growth from quarter 3, and will bring the fiscal year revenues to almost 16 million or a 260% growth from the last fiscal year. Assuming Q4 represents a similar return on sales as Q3, earnings should be approximately 500,000 assuming no new sales were made, which would represent earnings per share of .05. This would bring total earnings per share for the fiscal year to .084. Assuming that the stock continues to trade at roughly 20 times earnings, this new price would be 1.50.

The company anticipates that cash on hand will be enough to take it through the remainder of the fiscal year. The current assets alone are .8 million dollars greater than the total debt, meaning neither solvency or liquidity presents a problem. The company is running on a cash flow positive basis of 2.7 million dollars, and a cash flow positive from operations basis of 2.8 million dollars. Except for the 500,000 shares issued to Hamon Cottrell, the company has not issued any new equity since 1999.

http://www.freedgar.com/search/FilingsResults.asp?SourcePage=CompanyList&CIK=900393&UseFrame...

Hamon Cottrell:
Hamon Cottrell recently formed a strategic alliance with Turbosonic in which both companies will combined their marketing and management forces. Hamon Cottrell has annual revenues in excess of 580 million, presenting Turbosonic with an excellent marketing opportunity. As part of this deal Hamon Cottrell purchased 500,000 shares of Turbosonic for 500,00 in cash. This represents a 50% increase of the average closing bid in the period before this deal was announced. This is a far cry from the typical Otc BB equity strategies including outrageous interest rate loans, private placements at well under market value, and convertible debt. Additionally Hamon Cottrell has received options to purchase a majority stake in the company between 1.80 and 2.50 per share.

http://biz.yahoo.com/prnews/010807/nytu077.html


Articles and websites:
Article on Turbosonic's planned (and now executed) growth:
http://www.therecord.com/business/business_010126123923.html

In depth discussion of Turbosonic products from leading environmental web site:
http://www.environmental-expert.com/technology/turbosonic/turbosonic.htm

Hamon Cottrell Website:
http://www.hamon-researchcottrell.com/